Commercial Times: Myths about free economic pilot zones
Central News Agency
2014-06-06 10:51 AM
Over the past week, National Development Council (NDC) Minister Kuan Chung-ming has said in numerous media interviews that the free economic pilot zone project will help Taiwan break out of its economic stagnation. The council has also created fact sheets to explain the necessity of the pilot zones. But are the pilot zones really a panacea for Taiwan's economic plight? First, it is an exaggeration for the NDC to attribute Taiwan's declining export competitiveness against South Korea to that country's large number of free trade agreements (FTAs). Taiwan began to lag behind South Korea in terms of export volume in 1994, and by 2011, Taiwan's exports had dropped to just 55 percent of South Korea's. However, the Korea-European Union FTA did not become effective until July 2011, while the Korea-U.S. FTA only went into effect in 2012. Second, Taiwan was ranked 17th by the U.S.-based Heritage Foundation in terms of economic freedom this year, ahead of South Korea at 31st, Japan at 25th and Germany at 18th. This disproves the NDC's argument that insufficient liberalization is the main reason for Taiwan's sluggish economy. Third, the free economic pilot zones are mainly based in free ports around Taiwan, which had a total output of just NT$31 billion and a workforce of 6,000 in 2011. Given their small output, it will be difficult for the pilot zones to lead the way out of Taiwan's economic stagnation. In addition, the NDC believes that taking the initiative to open Taiwan's market will create favorable conditions for Taiwan to negotiate FTAs with other countries. In fact, doing so will only result in a loss of bargaining chips during FTA talks. We have no intention of being a wet blanket. But the government should be more analytical amid the country's current plight. (Editorial abstract -- June 6, 2014) (By Y.F. Low)
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